Smartphone Operating Systems - Third Place Will Go To BlackBerry

There can be no doubt that the two leading smartphone operating systems are Google's (NASDAQ:GOOG) Android and Apple's (NASDAQ:AAPL) iOS. However, there is room in the market for at least one more player, and the battle for third place is being fought between BlackBerry (NASDAQ:BBRY) and Microsoft (NASDAQ:MSFT) Windows8.

Nokia (NYSE:NOK) manufactures a range of Windows phones, from the low cost Lumia520 to the flagship Lumia920, which competes at the high price level with the Blackberry Z10 and Q10. HTC (OTC:HTCKF) sells its 8 and 8X series of Windows phones, and Samsung (OTC:SSNLF) makes the ATIV phone with the Windows operating system

BlackBerry introduced its new touchscreen Z10 phone with a phased launch starting in the UK at the end of January and launching in the U.S. at the end of March. The keyboard version (the Q10) launched in Europe this week, and is expected in the U.S. later this month. The older BlackBerry phones are sold worldwide at prices that vary widely from country to country, but are generally lower than the new BB10 phones. BlackBerry has announced that it will launch lower cost phones later this year, though it has not been made clear whether these will use the BB10 operating system or the old BB7 system.

Recently published data from ComTech shows Windows with a strong lead over BlackBerry. However, that data was for the first quarter of 2013, when the BlackBerry Z10 had been on sale in a limited number of countries.

Windows

BlackBerry

UK*

7.0%

5.1%

Germany

6.1%

0.5%

Spain

1.3%

0.2%

USA

5.6%

0.9%

Data from ComTech - market share of smartphones by operating system - Q1,2013

*During the ComTech survey period, the Z10 had been on sale for two months in the UK, but had only been available for about one week in the USA.

How do the Windows and BlackBerry sales compare now?

I have made an analysis of the sales, based on popularity rankings on the websites of major retailers in Europe and the U.S. I used Carphone Warehouse in the UK, and Phone House in the other European countries. These two sites belong to the same company, which is Europe's biggest seller of smartphones, with over 2400 stores in 8 countries. Unfortunately, a comparison from France is not available because the Phone House website for France does not provide a list ranked by best selling phones, and Italy does not have a Phone House website.

I earlier articles, I did a lot of work developing curves to relate the position rankings to sales at the Carphone Warehouse and Best Buy sites. I have used the same curves to develop the market share forecasts in the Table below:

Windows

BlackBerry

UK

4.0%

17.7%

Germany

5.9%

2.3%

Spain

3.5%

1.2%

Netherlands

2.6%

2.0%

Sweden

2.8%

2.0%

USA (Amazon)

2.8%

2.6%

USA (Best Buy)

2.0%

2.2%

Weighted average

3.2%

4.1%

The average has been calculated using population as a weighting factor. The BlackBerry Q10 has been on the Carphone Warehouse site for the last two weeks and is ranked in 10th place, presumably based on pre-orders. None of the other rankings include the Q10.

BlackBerry bulls were given a boost when Selfridges reported that the launch of the Q10 was its biggest selling electronic product ever, and when Seeking Alpha author Michael Collins gave us reports of line-ups and sell-outs on the first day. To put this into perspective, the Q10 was available in one London store, two days ahead of the general launch date for the UK. There will always be a group of people who want to be first to have the latest piece of technology. Limiting the initial launch to one store was a brilliant way of creating buzz for the product, but not necessarily a good indication of sustainable sales.

Some other things to note:

My analysis predicts that just over half of the UK BlackBerry sales are BB10 series phones, the rest are older BB7 phones, which are being offered with limited access plans at very low rates. In the rest of Europe and the U.S., over 70% of BlackBerry sales are BB10 phones.

The Nokia Lumia is the best selling Windows phone, taking about 70% of the share.

In the U.S., the introduction of the Samsung Galaxy S4 has pushed all other phones down in the rankings. BlackBerry sales have leveled off and the highest ranked Z10 has slipped to 53rd, out of 182 smartphones at Best Buy, and 19th at Amazon.

My analysis shows BlackBerry slightly ahead of Windows, due mostly to outstanding sales in the UK. However, the analysis is looking only at sales through consumer outlets. The enterprise business sales will add to BlackBerry's lead, as will sales of the Q10 phone. When real numbers are released in a couple of months, I expect BlackBerry to be firmly established in third place.

Disclosure: I am long BBRY. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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